Kelly, Scott Introduce Legislation to Fix Clean Water Federal Funding System

Today, Senators Mark Kelly (D-AZ) and Rick Scott (R-FL) introduced the Clean Water Allotment Modernization Act of 2026, legislation that would replace the outdated, fixed percentage formula used to allocate Clean Water State Revolving Fund (CWSRF) grants. The new system is a transparent, needs-based formula that reflects current clean water infrastructure demands, state populations, and economic burden.

Kelly first introduced the Clean Water Allotment Modernization Act in 2021 when a 2016 Environmental Protection Agency report found that an updated formula would triple the amount of clean water funding available to Arizona. As a senior member of the Environment and Public Works Committee, Kelly has championed fixing the formula for years. In 2024, following a request from Kelly, the Government Accountability Office (GAO) released a report recommending Congress update the CWSRF formula. Kelly and Scott's bill would implement the recommendations of the GAO study to ensure fast-growing, high-need states like Arizona receive their fair share.

"Arizona has grown dramatically, but the allocation system for federal water infrastructure funding hasn't been updated," said Kelly. "Our bipartisan bill fixes this so Arizona gets the resources it needs for a secure water future."

"It's time to bring the CWSRF into the 21st century. Through the Clean Water Allotment Act, Florida, along with 30 other states, will start receiving the proper funds which reflect our modern population sizes, areas of need, and economically constrained areas. This will help maintain our clean water infrastructure while protecting our beautiful natural lakes, rivers, and wetlands," said Rick Scott.

Background:

The Clean Water State Revolving Fund, established in 1987, provides low-interest loans for water quality infrastructure projects. As loans are repaid, funds are recycled to support new projects but the formula used to allot funds to each state has never been updated. Based on GAO analysis, the modernized formula would result in 31 states receiving the same or higher allotment.

The Clean Water Allotment Modernization Act of 2026 would:

• Replace the Clean Water State Revolving Fund's outdated 1987 allotment formula with a needs-based formula recommended by a GAO expert panel, distributing funds based on documented infrastructure needs (60%), state population from the most recent census (20%), and share of population at or below 200% of the federal poverty level (20%).
• Ensure fast-growing states like Arizona receive funding that reflects their actual needs - not data from nearly four decades ago.
• Protect states during the transition by capping annual allotment increases at 200% and decreases at 25% during the first four years.
• Maintain dedicated funding for Indian tribes and U.S. territories and leave Bipartisan Infrastructure Law allocations untouched.

Click here to read the full text of the bill.